Core Viewpoint - The establishment of Shandong Xuanqi Recycling Co., Ltd. indicates a growing focus on the recycling and resource recovery industry in China, particularly in the context of new energy and waste management [1] Company Summary - Shandong Xuanqi Recycling Co., Ltd. has been established with a registered capital of 20 million RMB, fully owned by Taizhou Xuanqi Trading Co., Ltd. [1] - The legal representative of the company is Sun Ruqiang [1] - The company operates in various sectors including recycling of renewable resources, processing of non-metal waste, and the recovery and secondary utilization of used power batteries from new energy vehicles [1] Business Scope - The business scope includes: - Recycling of renewable resources (excluding production waste metals) - Processing of non-metal waste and debris - Recovery of used power batteries from new energy vehicles (excluding hazardous waste management) - Battery leasing and sales - Water resource management and solid waste treatment - Sales of labor protection products and internet sales (excluding licensed goods) [1] - The company is also involved in technology services, research and development in emerging energy technologies, and biomass fuel processing [1] Regulatory Compliance - The company is required to obtain relevant approvals for certain operations, such as wastewater treatment and the recycling of scrapped vehicles and electronic products [1] - The business is registered in the High-tech Industrial Development Zone of Liaocheng, Shandong Province, with an indefinite operating period [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company has shown steady growth in operational business and a gradual increase in dividends. The performance for 2024 and Q1 2025 aligns with expectations, with total revenue of 6.611 billion yuan in 2024 (up 1.36% year-on-year) and a net profit attributable to shareholders of 1.141 billion yuan (up 6.18% year-on-year) [6] - The company is actively expanding its waste incineration operations and enhancing sanitation services, with a significant increase in waste volume and energy generation. The company is also exploring resource recovery initiatives [6] - The water supply model in Xinyang is being successfully implemented and is expected to be replicated in other regions, with multiple wastewater projects being awarded [6] - The highway operations remain stable, with ongoing feasibility studies for potential upgrades [6] - Although operating cash flow has decreased, capital expenditures have significantly dropped, allowing for an increase in dividends [6] Financial Data and Profit Forecast - Total revenue is projected to be 6.740 billion yuan in 2025, with a year-on-year growth rate of 2.0% [5] - The net profit attributable to shareholders is expected to reach 1.187 billion yuan in 2025, reflecting a 4.0% year-on-year increase [5] - Earnings per share are forecasted to be 1.85 yuan in 2025, with a gross margin of 41.0% [5] - The return on equity (ROE) is projected to be 12.6% in 2025 [5] - The company is expected to maintain a price-to-earnings (PE) ratio of 8 in 2025, decreasing to 7 in subsequent years [5]

Core Insights - The report released by the China Material Recycling Association indicates that the recycling industry in China is expected to continue expanding in 2024, with a total recycling volume reaching 401 million tons, representing a year-on-year growth of 6.5% [1] - The total recycling value is projected to reach 1.33 trillion yuan, with waste steel remaining the most recycled material, accounting for over 60% of the total [1] - The successful implementation of the "old-for-new" policy for consumer goods has significantly increased the recycling volumes of discarded electrical and electronic products as well as scrapped vehicles [1] - The report highlights that the recycling system in China is becoming increasingly refined, driven by policy incentives and technological innovations, and the industry is moving towards standardization, scaling, and intensification [1]